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phased retirement: employee and employer perspectives
The majority of current workers of all ages view retirement as a gradual process and regard
opportunities for phased retirement as important or very important. Among older workers, many
are already “partially retired” or “working in retirement”. Although employers recognize the need to
mitigate potential knowledge loss as older workers retire, no more than half currently offer phased
retirement to at least some employees, and relatively few report that they are considering doing so in
the future. Perceived barriers include legal and regulatory concerns and rules related to modifying the
distribution of pension benefits.
1
Do workers today expect to retire gradually?
Yes, the majority of current workers of all ages regard retirement as a gradual process. Survey respondents rate
opportunities for phased retirement as important or very important aspects of a job. Among older workers, many
are already “partially retired” or “working in retirement”.
Among workers aged 18-64, “a strong majority (64%) of workers
envision a phased transition into retirement during which they will
continue working, reduce hours with more leisure time to enjoy life,
or work in a different capacity that is less demanding and/or brings
greater personal satisfaction. Only 22% expect to immediately
stop working when they retire. Baby Boomers, Generation X, and
Millennials share similar expectations,” according to the 2014
TransAmerica retirement survey.1
Among adults age 50+ who are employed full- or part-time or who are
looking for work, “formal phased retirement programs were deemed
‘very important’ or ‘somewhat important’ by the majority of workers
(57% and 52%, respectively),” according to a 2012 AARP/SHRM
survey.2
“While partial retirement was virtually non-existent for 60-62 years
2
olds in 1960, over the past 20 years more than 15% of workers
in this age group are categorized as partially retired. For 65-67
year olds, the recent partial retirement rate is over 20%, up from
5-10% in 1960, according to a 2013 analysis of data from the Social
Security Administration.”3
Compared to those in pre-retirement careers, retirees who are
employed “are nearly five times more likely to work part-time (83%
vs. 17%),” according to a 2014 analysis of data from a survey by
Merrill Lynch.4
According to the AARP 2013 career study on older workers (ages
45-74), in 2002 and 2007, 67% of workers ages 45 to 74 held fulltime jobs. By 2012, the percentage with full-time jobs had decreased
11 points to 56%. The percentage working part-time has increased
from 11% in 2002 to 16% in 2012.5
Are employers offering phased retirement opportunities to their employees?
Some do, but survey results vary widely. One survey of employers indicates that half of organizations offer phased
retirement to at least some employees, while two other surveys report that only about one tenth of employers do so.
In a recent survey of employees, around 20% reported that their employers are offering phased retirement options.
According to the 2014 National Study of Employers, 54% of
organizations offer all or at least some employees to “phase into
retirement by working reduced hours over a period of time prior
to full retirement,” while 18% allow all or most employees to do
so. Small employers [50-99 employees] are somewhat more likely
than large employers [1000+ employees] to allow employees to
phase into retirement (19% vs. 12%), although this difference is not
statistically significant.6
fact1 sheet 39
The 2014 SHRM Employee Benefits Report found that “overall, 11%
of organizations offered some type of phased retirement: 4% offered
a formal phased retirement program and 9% offered an informal
program”.7
In the 2014 Transamerica Retirement Survey, “just 21% of workers
say their employers enable employees to reduce work hours and
shift from full-time to part-time, and even fewer (14%) say their
august 2014
employers enable employees to take positions which are less
stressful or demanding. Baby Boomers (34%) are most likely to
indicate that their employers do ‘none of these’ in reference to the
listed practices and programs”.1
3
According to a 2012 Conference Board survey, “of survey
respondents, 11% said they offer a phased retirement program and
30% said they rehire retirees”.8
Is it likely that phased retirement options will increase in availability in the future?
Uncertain. Although employers recognize the need to mitigate potential knowledge loss as older workers retire, relatively
few employers report that they are considering phased retirement programs for the future. Perceived barriers include
legal and regulatory concerns and rules related to modifying the distribution of pension benefits.
Among steps that employers plan to take to mitigate the potential
loss of knowledge as older workers retire, more than half of the
employers say that they will try to keep older workers on as parttime workers or consultants (69%). Other steps include use of a
knowledge transfer program to allow workers who are approaching
retirement age to mentor or transfer knowledge to younger workers
(53%), and they will use a succession plan for critical positions
(51%). Almost half (46%) will try to entice older workers to remain
as full-time employees, according to a 2011 AARP survey of over
1000 HR directors.9
worker, and another 142 (15%) of the establishments said that
phased retirement was possible in some cases. In most of these
establishments, the employer has in mind an informal arrangement
that is negotiated with an individual worker and that occurs before
official retirement. Formal phased retirement plans are rare,
especially in small organizations”.11
When asked about their retirement plan initiatives for 2014, 6%
of US employers report that they are very likely to evaluate phased
retirement alternatives, while 20% report that they are somewhat
likely to do so. Others say that they are somewhat unlikely (44%)
or very unlikely (30%) to evaluate phased retirement alternatives for
their employees, according to a 2014 report from Aon Hewitt.10
In a 2009 MetLife survey of “240 large employers who offer defined
benefit (DB) and defined contribution (DC) plans, 76% of those
who offer ‘DC plans only’ believe that regulatory complexities and
ambiguities impact their organization’s ability to offer a phased
retirement program, compared to 65% of employers who offer both
DB and DC plans. Similarly, 56% of employers who offer ‘DC plans
only,’ and 45% of employers who offer both plans, believe that rules
prohibiting the modification of plan distribution options (and other
features) are a key barrier to phased retirement programs”.13
According to a 2010 report based on a survey of 950 small and
large employers, “637 (67%) of the establishments indicated that
that phased retirement would be feasible for a generic white collar
Among mid-size and large employers, “more than half (52%) believe
there are significant legal and regulatory barriers” to implementing a
phased retirement program, according to a 2008 Hewitt survey.12
References
1 Collinson, C. (2014). The retirement readiness of three unique generations: Baby
boomers, generation X, and millennials. US: Transamerica Center for Retirement
Studies. Retrieved from http://www.transamericacenter.org/docs/defaultsource/resources/center-research/tcrs2014_sr_three_unique_generations.pdf
2 Brown, S. K. (2012). What are older workers seeking? An AARP/SHRM survey of 50+
workers. Washington, DC: AARP. Retrieved from http://www.aarp.org/content/
dam/aarp/research/surveys_statistics/econ/2012/What-Are-Older-WorkersSeeking-An-AARP-SHRM-Survey-of-50-Plus-Workers-AARP.pdf
3 Gorodnichenko, Y., Song, J., & Stolyarov, D. (2013). Macroeconomic determinants
of retirement timing. (Working Paper No. 2013-281). Ann Arbor, MI: University
of Michigan Retirement Research Center. Retrieved from http://www.mrrc.isr.
umich.edu/publications/papers/pdf/wp281.pdf
4 Merrill Lynch. (2014). Work in retirement: Myths and motivations. U. S.: Merrill
Lynch. Retrieved from http://www.wealthmanagement.ml.com/publish/content/
application/pdf/GWMOL/MLWM_Work-in-Retirement_2014.pdf
5 AARP. (2014). Staying ahead of the curve 2013: AARP multicultural work and career
study: Older workers in an uneasy job market. Washington, DC: AARP. Retrieved
from http://www.aarp.org/content/dam/aarp/research/surveys_statistics/general/2014/Staying-Ahead-of-the-Curve-2013-The-Work-and-Career-Study-AARP-resgen.pdf
6 Matos, K., & Galinsky, E. (2014). 2014 National Study of Employers. New York: Families and Work Institute. Retrieved from http://www.familiesandwork.org/2014national-study-of-employers/
2
7 SHRM. (2014). 2014 employee benefits. Alexandria, VA: Society for Human Resource
Management. Retrieved from https://www.shrm.org/Research/SurveyFindings/
Documents/14-0301%20Beneftis_Report_TEXT_FNL.pdf
8 Levanon, G., Rappaport, A., Abel, A., & Cheng, B. (2012). Recession aftermath: What
the delayed retirement of mature workers means for business. (Executive Action
Report No. 375). New York: The Conference Board.
9 Perron, R. (2011). Employer experiences and expectations: Finding, training, and keeping qualified workers. Washington, DC: AARP. Retrieved from http://assets.aarp.
org/rgcenter/econ/finding-training-keeping-qualified-workers.pdf
10AonHewitt. (2014). 2014 hot topics in retirement: Building a strategic focus. US:
AonHewitt. Retrieved from http://www.aon.com/attachments/human-capitalconsulting/2014_Hot-Topics-Retirement_Report_vFinal%281%29.pdf
11 Hutchens, R. (2010). Worker characteristics, job characteristics, and opportunities
for phased retirement. Labour Economics, 17(6), 1010-1021
12Hewitt Associates. (2008). Retiring boomers prompt increased employer interest in
phased retirement programs, according to Hewitt survey. Retrieved January 28,
2009, from http://www.hewittassociates.com/Intl/NA/en-US/AboutHewitt/
Newsroom/PressReleaseDetail.aspx?cid=5451
13 MetLife. (2009). MetLife emerging retirement model study: A survey of plan sponsors.
New York: MetLife. Retrieved from http://https://www.metlife.com/assets/institutional/services/cbf/retirement/EmergRetireModelStudy_0912.pdf
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